A & B Enterprises is trying to select the best investment from among two alternatives. Each alternative involves an initial outlay of $100,000. Their cash flows follow:

YEAR A B

1 30,000 0

2 30,000 25,000

3 30,000 35,000

4 30,000 45,000

5 30,000 50,000

Evaluate and rank each alternative based on

a. payback period

b. net present value (use a 10% discount rate) and

c. internal rate of return.